Stewart Information Services (NYSE: STC) and First American (NYSE:FAF) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, risk, institutional ownership, valuation, dividends and earnings.
Volatility & Risk
Stewart Information Services has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, First American has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500.
This is a summary of recent recommendations for Stewart Information Services and First American, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Stewart Information Services||0||1||0||0||2.00|
Stewart Information Services presently has a consensus price target of $46.00, indicating a potential upside of 7.03%. First American has a consensus price target of $70.00, indicating a potential upside of 28.28%. Given First American’s stronger consensus rating and higher probable upside, analysts plainly believe First American is more favorable than Stewart Information Services.
This table compares Stewart Information Services and First American’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Stewart Information Services||2.49%||7.42%||3.61%|
Stewart Information Services pays an annual dividend of $1.20 per share and has a dividend yield of 2.8%. First American pays an annual dividend of $1.52 per share and has a dividend yield of 2.8%. Stewart Information Services pays out 55.3% of its earnings in the form of a dividend. First American pays out 55.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. First American has increased its dividend for 6 consecutive years.
Insider & Institutional Ownership
88.0% of Stewart Information Services shares are owned by institutional investors. Comparatively, 84.9% of First American shares are owned by institutional investors. 2.2% of Stewart Information Services shares are owned by insiders. Comparatively, 3.0% of First American shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Stewart Information Services and First American’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Stewart Information Services||$1.96 billion||0.52||$48.65 million||$2.17||19.81|
|First American||$5.77 billion||1.05||$423.04 million||$2.75||19.84|
First American has higher revenue and earnings than Stewart Information Services. Stewart Information Services is trading at a lower price-to-earnings ratio than First American, indicating that it is currently the more affordable of the two stocks.
First American beats Stewart Information Services on 14 of the 17 factors compared between the two stocks.
Stewart Information Services Company Profile
Stewart Information Services Corporation, through its subsidiaries, provides title insurance and real estate transaction services. The company operates in two segments, Title Insurance and Related Services, and Ancillary Services and Corporate. The Title Insurance and Related Services segment is involved in searching, examining, closing, and insuring the condition of the title to real property. This segment also offers centralized title services, including title and closing, post-closing, default, and REO-related title services; home and personal insurance services; and services for tax-deferred exchanges. The Ancillary Services and Corporate segment primarily provides search, appraisal, and valuation services to the mortgage industry. The company serves homebuyers and sellers, residential and commercial real estate professionals, mortgage lenders and servicers, title agencies and real estate attorneys, home builders, and mortgage brokers and investors. It operates in the United States, Canada, the United Kingdom, Australia, Central Europe, and internationally. Stewart Information Services Corporation was founded in 1893 and is headquartered in Houston, Texas.
First American Company Profile
First American Financial Corporation, through its subsidiaries, provides financial services. It operates through Title Insurance and Services, and Specialty Insurance segments. The Title Insurance and Services segment issues title insurance policies on residential and commercial property, as well as offers related products and services. This segment also provides closing and/or escrow services; products, services, and solutions involving the use of real property related data to mitigate risk or otherwise facilitate real estate transactions; and appraisals and other valuation-related products and services, lien release and document custodial services, default-related products and services, and title evidence services, as well as banking, trust, and wealth management services. In addition, it accommodates tax-deferred exchanges of real estate; and maintains, manages, and provides access to title plant records and images. This segment offers its products through a network of direct operations and agents in 49 states and in the District of Columbia, as well as in Canada, the United Kingdom, Australia, South Korea, and internationally. The Specialty Insurance segment provides property and casualty insurance comprising coverage to residential homeowners and renters for liability losses and typical hazards, such as fire, theft, vandalism, and other types of property damage. It also offers residential service contracts that cover residential systems, such as heating and air conditioning systems, and appliances against failures that occur as the result of normal usage during the coverage period; and offers auto insurance products. This segment markets its property and casualty insurance products through direct distribution channels, including cross-selling through its existing closing-service activities, as well as through a network of independent brokers. First American Financial Corporation was founded in 1889 and is based in Santa Ana, California.
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